Peru Open to Rate Cut as Central Bank Mulls Lower GDP Forecast

Peruvian policy makers are open to cutting their benchmark interest rate if an economic slowdown takes hold in the Andean nation, central bank President Julio Velarde said.

The central bank board may cut this year’s growth forecast after the economy expanded in March at the slowest pace since October 2009, Velarde told reporters in Lima today.

Peru’s central bank has kept its benchmark lending rate at 4.25 percent for two years, matching Malaysia for the longest pause in developing countries. The bank’s current estimate is for GDP to climb 6.3 percent this year after expanding an average 6.5 percent in the past decade.

“There is a deceleration,” Velarde said. “If we see a considerable deceleration, we could reduce the interest rate.”

Gross domestic product rose 4.8 percent in the first quarter from the year earlier, the slowest pace in more than three years, according to the median estimate of 13 analysts polled by Bloomberg. The statistics agency will release the first-quarter report tomorrow. In March, economic activity expanded 3 percent from a year ago.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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